OREANDA-NEWS. February 18, 2011. The Luhanskteplovoz, Ukraine's monopoly producer of mainline locomotives, has decreased losses (UAH 7.5mn) by c.21x yoy in FY10. The company finished 4Q10 posting a net profit of UAh 13.5mn that implies 2.1x qoq growth. Luhanskteplovoz also boosted its net revenues by 64.2% yoy up to UAH 859.4mn in FY10.
Millennium Capital consider the news as POSITIVE for Luhanskteplovoz. The company demonstrated positive results in 2H10 in spite of numerous litigation processes around its privatization by Transmashholding (Russia) in June 2010. As Transmashholding’s stance in the privatization deal improved notably by the end-2010, it is likely the situation around the plant will normalize in 2011. We expect a further recovery of the company resting on plentiful orders from the Russian railways. The latter plans to update its locomotive fleet by purchasing about 1,200 locomotives in the next three years. Moreover, a contract with Mongolia railways for 35 locomotives signed in 2010 will bring the company at least USD 100mn in revenues this year.
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